Time To Get Out Of The High-Risk Health Insurance Pool?

High-deductible "last resort" health plans have been the only option for some folks with pre-existing conditions. No more.

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Originally published on July 23, 2013 12:16 pm

The online health insurance marketplaces can't open soon enough for Chris and Kristi Petersen. Enrolled in the Iowa high-risk insurance pool because insurers on the private market won't cover them, the couple pays more than $1,300 each month for a plan with a $2,500 annual deductible and a 20 percent copay for medical services. It's more than they can afford.

"At the end of this year, these exchanges are either going to have to offer some relief, or I'm just going to quit working and let the welfare take care of us," says Chris. "I'm fed up with it. I'm fed up with insurance."

Change is coming for many of the roughly 220,000 people in 35 state high-risk pools, although they may not know it yet. The pools, some of which have been in existence for decades, offer last-resort coverage for people like the Petersens who have medical conditions that make them otherwise uninsurable.

Starting next year, insurers will no longer be able to deny coverage to people because they're sick, and high-risk pools will no longer be necessary for those patients.

Although shuttering high-risk pools will likely cause anxiety for those who rely on them, people may well find better, more affordable coverage on the state-based marketplaces (also called exchanges), which will open in October to offer plans that start in 2014.

"It's likely that the premiums will be lower on the exchanges, the deductibles will be lower, and there will be no annual or lifetime [benefit] maximums," says Jean Hall, director of the Institute for Health and Disability Policy Studies at the University of Kansas.

In addition, people who have incomes up to 400 percent of the federal poverty level ($45,960 for an individual in 2013) may be eligible for subsidies on the exchanges to make coverage more affordable.

The so-called pre-existing condition insurance plans — another type of high-risk plan that was created under the health care overhaul — will cease to exist at the end of the year as well, and members will transition to other coverage. PCIPs were always intended only as stopgap coverage until the Affordable Care Act took effect, to help uninsured people who couldn't get coverage elsewhere.

In Iowa, where the Petersens live, the state high-risk pool will continue to operate, at least for the time being, officials say.

The Petersens, who raise hogs on a farm near Clear Lake, Iowa, were profiled by Kaiser Health News in 2012. They lost their private insurance when the insurer claimed that Chris had failed to report a pre-existing hernia that he subsequently had surgically repaired, and Kristi was shorter than she'd reported — so she had a higher body mass index than the insurance company would accept.

Chris Petersen says he hasn't heard anything about what's happening with the Iowa high-risk pool. He hopes he and his wife will be able to find a plan on the exchange next year with a $1,000 deductible that will cost less than they currently pay.

High-risk pool members shouldn't assume states will provide a lot of assistance with making choices, says Katie Keith, an assistant research professor at the Georgetown University Center on Health Insurance Reforms.

"For consumers, if you're enrolled in high-risk pools, you need to examine your options," she says.